American Honda Motors

Strategic Audit Honda Motor Co.

In today's economy every business is trying to stay competitive and avoiding going out of business. The auto industry in particular which have been hit the hardest the past few years, with the big 3 Ford, GM, and Chrysler suffering the most, has every automaker running to be number 1 in the industry. Other major player have such as Honda, has taken advantage of the Big three's slump to get a piece of the market share. Honda Motors, which began operating in 1948, is one of the largest motorcycle producers and has become one of the leading automakers in the automotive market since entering the automotive market in 1959 (http://world.honda.com/history) Honda has grown over the years be way introducing one of the most economical and environmental vehicle in the market today, the Honda Accord line. Maintaining a successful company not only does it take a good product, its strategic audit of the corporation's current performance, strategic posture, board of directors and top management must all be in sync to avoid failure.

Current Performance

Honda Motor Co. is engaged in the development, production and sales of motor products. Four main segments compose the company. First are the two wheel vehicles, all terrain vehicles, and personal watercrafts. Second are the four wheel vehicles and related products. Third are the financial and insurance products. Fourth are general purpose products. All the following financial statistics are based on the trailing twelve [Numbers higher than 9 are expressed in numerals] months with information obtained from www.toolbox.investools.com, HMC (Honda Motor Corp)

Management effectiveness with a Return on Investment was 8.26% stating that for every dollar spent, 8.26 cents was added to the initial dollar spent. The rate of return on investment for the past 12 months was -15.94%. For every dollar an investor placed in Honda, a loss of $15.94 was incurred. In general, stocks throughout the entire auto manufacturing industry dropped. On the high note, in the last 18 weeks, the return on investment for Honda has improved to a -$3.10. Analysts are currently recommending purchasing Honda stock again, and expecting the return to go positive.

Gross Margin or Gross Profit are the Total Sales less the Cost of Goods Sold and the margin is 29.24%. Gross profits are used to pay fixed expenses such as Administration and Building Expenses. Operating Margin is the pricing strategy. Pricing strategy is the amount anticipated to be left over after paying for the variable costs of production. Honda Operating Margin is 8.19%. The Profit Margin is currently 5.13%

Profit Margin is how much out of every dollar the company keeps in earnings.

American Honda Motors is in the business of making several products such as in the Motorcycle business, Automobile business and Power Product business. They are also trying to move into the building of the compact business jet called the Honda Jet. Honda has a philosophy with basic principles and policies. Their mission statement states "Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality at a reasonable price for world wide customer satisfaction." (Honda, pg1)

With basic principles they can establish this mission by respecting the individual and exploiting the three joys Ð'- buying, selling and creating. They can also accomplish their objectives by implementing future initiatives as stated by Mr. Takeo Fukui (President and Chief Executive Officer) "The environment in which Honda operates is likely to grow increasingly challenging. Honda will address this situation by accelerating efforts to strengthen the core characteristics that make Honda unique as we create new value and continue to deliver products and services that exceed the expectations of our customers." (Fukui, pg 3). There are several ways that Honda is working on to help meet their objectives such as establishing advanced manufacturing systems and capabilities, strengthening the foundation for global growth, and strengthening their commitment to reducing their environmental footprint.

The three ways of efforts are consistent with their mission statement and are consistent with each other. They are putting forth the effort to make things better for their company, employees and most importantly [the extra syllable in importantly lends no additional weight and is rarely correct--the word is seldom adverbial in intention. Write simply "important"] their customers. Without these goals Honda would not be in the growing stage that they are in with their internal and external environments. They will grow in Japan in order to strengthen their production and establish a plant in North American operations in Indiana. The effort of reducing the emission levels by 2010 will also be a key factor for them to become a better competing company.

Board of Directors

It is important for major corporations to have a well structured Corporate Governance to be successful in their respective industry. Corporate Governance is viewed as both the structure and the relationship that determines the companies direction and performance (http://corpgov.net/index.htm) [Do not use URLs for in-text citations.] . In order for Honda to be competitive and stay in business, the right board of directors must be chosen. Honda currently has 20 members on the board of which eighteen [Numbers higher than 9 are expressed in numerals] are internal and two are external. One of the external directors, Mr. Satoru Kishi, is an advisor of the board of the Bank of Tokyo-Mistsubishi. All board members currently serving are top senior management and bring extensive years employed with Honda Motors. For example, Satoshi Aoki, who has held, senior positions throughout his career was hired by Honda in 1969,and is currently chairman and CEO of the company. Mr. Aoki was recently appointed to the board of directors. Mr. Satoru Kishi is the longest raining member of the board, and he joined back in 2001(Mcgraw-Hill Companies, http://www.investing. Businessweek.com) [Do not use URLs for in-text citations.] . Honda Motors is a publicly traded company and one of the six major players in the automotive industry trying to stay within the same playing field as Toyota, GM, Ford, Chrysler and Nissan. Honda is globally known with operations in Japan, the Americas and China with the largest market being in North America and comprising 80% of Honda automobiles sold in the U.S.(http://world.honda.com). While trying to gain share in the market, Honda is always looking to make their products better and more